NEW YORK: US Treasury prices fell on Monday, extending losses from Friday, as investors evaluated the likelihood of further Federal Reserve rate hikes this year and as the United States and China resumed trade talks.
Bond yields rose and stocks rallied on Friday after Fed Chairman Jerome Powell sought to ease market concerns that the US central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year.
That came after December's jobs report showed that employers added 312,000 workers to their payrolls, the most in 10 months, while average hourly earnings rose 11 cents, or 0.4 percent.
"You had a blockbuster payroll number and Powell basically giving the market exactly what it wanted," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
Benchmark 10-year notes fell 6/32 in price to yield 2.680 percent, up from 2.659 percent on Friday. The yields fell as low as 2.543 in overnight trading on Thursday, the lowest since January 2018.
The yields have tumbled from 3.05 percent at the beginning of December as concerns about slowing international growth and Fed rate increases prompted a sharp selloff in stocks.
Interest rate futures traders are now partially pricing in a rate cut for this year, while the Fed has said that two rate increases are likely.
The US central bank will release minutes from its December meeting on Wednesday. Powell is also due to speak on Thursday.
Bond yields and stocks pushed higher on Monday even after data was less bullish on the economy, showing that the growth of US services industries slowed to a five-month low in December.
Investors are also focused on trade talks between the United States and China.
US officials are meeting their counterparts in Beijing this week for the first face-to-face talks since US President Donald Trump and China's President Xi Jinping agreed in December to a 90-day truce in a trade war.
The Treasury Department will sell $78 billion in coupon-bearing supply this week, including $38 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday.